DoD's $158M U-2 Support Contract Awarded to Lockheed Martin Raises Value Concerns
Contract Overview
Contract Amount: $158,075,354 ($158.1M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2021-04-01
End Date: 2026-05-28
Contract Duration: 1,883 days
Daily Burn Rate: $83.9K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: FY21 U-2 SUPPORT AND SUSTAINMENT AND PROGRAMMED DEPOT MAINTENANCE
Place of Performance
Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93599
Plain-Language Summary
Department of Defense obligated $158.1 million to LOCKHEED MARTIN CORPORATION for work described as: FY21 U-2 SUPPORT AND SUSTAINMENT AND PROGRAMMED DEPOT MAINTENANCE Key points: 1. High contract value for legacy aircraft sustainment. 2. Sole-source award to incumbent contractor limits competition. 3. Potential for cost overruns due to Cost Plus Fixed Fee structure. 4. Long contract duration may not reflect evolving needs.
Value Assessment
Rating: questionable
The $158 million contract for U-2 support and sustainment appears high given the aircraft's age and the sole-source nature of the award. Benchmarking against similar legacy aircraft sustainment contracts is difficult without more detailed cost breakdowns, but the price warrants scrutiny.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded sole-source to Lockheed Martin Corporation, the incumbent contractor. This lack of competition likely resulted in a higher price than could have been achieved through a competitive bidding process, limiting price discovery.
Taxpayer Impact: Taxpayers may be overpaying for U-2 sustainment due to the absence of competition, with funds potentially diverted from more critical or modern defense needs.
Public Impact
Continued funding for an aging intelligence, surveillance, and reconnaissance (ISR) platform. Potential impact on modernization efforts if funds are heavily allocated to legacy systems. Ensures continued operational capability for a critical, albeit old, asset.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost Plus Fixed Fee contract type
- Legacy system sustainment
- Long contract duration
Positive Signals
- Ensures continued operational capability of U-2
- Supports a critical ISR platform
Sector Analysis
The Department of Defense (DoD) frequently awards large contracts for aircraft sustainment. This $158 million contract for the U-2 falls within typical spending ranges for specialized aircraft support, but the sole-source nature and contract type warrant closer examination for value.
Small Business Impact
This contract was awarded to Lockheed Martin Corporation, a large prime contractor. There is no indication of subcontracting opportunities for small businesses within the provided data, suggesting limited direct small business involvement.
Oversight & Accountability
The sole-source nature of this award suggests a potential lack of robust competition oversight. Further review of the justification for other than full and open competition is recommended to ensure accountability.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Sole-source award limits competition and potentially inflates price.
- Cost Plus Fixed Fee contract type offers limited incentive for cost control.
- Sustainment of an aging platform may not be the most cost-effective use of funds.
- Long contract duration (over 5 years) may not align with evolving technological needs.
Tags
aircraft-manufacturing, department-of-defense, ca, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $158.1 million to LOCKHEED MARTIN CORPORATION. FY21 U-2 SUPPORT AND SUSTAINMENT AND PROGRAMMED DEPOT MAINTENANCE
Who is the contractor on this award?
The obligated recipient is LOCKHEED MARTIN CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Air Force).
What is the total obligated amount?
The obligated amount is $158.1 million.
What is the period of performance?
Start: 2021-04-01. End: 2026-05-28.
What is the projected cost-effectiveness of sustaining the U-2 program versus investing in newer ISR platforms?
The cost-effectiveness of sustaining the U-2 program is questionable when weighed against the potential benefits of investing in newer, more advanced ISR platforms. While the U-2 provides unique capabilities, its aging infrastructure and associated sustainment costs, especially under a sole-source contract, could be redirected towards more technologically superior and potentially more cost-efficient future systems.
What specific risks are associated with the Cost Plus Fixed Fee (CPFF) contract type for this sustainment effort?
The primary risk with a CPFF contract for sustainment is that the contractor is reimbursed for all allowable costs plus a fixed fee. This structure provides less incentive for the contractor to control costs compared to fixed-price contracts. If cost overruns occur, the government bears the financial burden, potentially leading to higher overall expenditures than initially budgeted.
How effective is the current U-2 platform in meeting modern intelligence, surveillance, and reconnaissance requirements compared to alternatives?
The U-2 platform, while historically effective and possessing unique capabilities, faces challenges in meeting all modern ISR requirements due to its age and operational constraints. Newer platforms often offer enhanced sensor technology, greater flexibility, and potentially lower operational footprints. The effectiveness of the U-2 is thus increasingly dependent on specific mission needs and its integration with newer systems.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: FA852820R0017
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Lockheed Martin Corp
Address: 1011 LOCKHEED WAY, PALMDALE, CA, 93599
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $162,628,737
Exercised Options: $162,628,737
Current Obligation: $158,075,354
Subaward Activity
Number of Subawards: 75
Total Subaward Amount: $4,453,179
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: FA852819D0015
IDV Type: IDC
Timeline
Start Date: 2021-04-01
Current End Date: 2026-05-28
Potential End Date: 2026-05-28 00:00:00
Last Modified: 2025-12-18
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